Oil up 3pc, recouping some losses from Trump tariffs comments

NEW YORK: Oil prices were up 3% on Friday, a partial rebound from their biggest daily drop in several years on US President Donald Trump's vow to impose more tariffs on Chinese imports.

The tariffs, due to take effect on Sept. 1, intensify the trade war between the world's top two economies and oil consumers. Any resulting economic slowdown could hurt crude demand.

Brent crude was up $1.65, or 2.7%, to $62.15 a barrel by 1:32 p.m. EDT (1732 GMT). The global benchmark slid more than 7% on Thursday, the steepest daily drop in more than three years.

The US crude benchmark gained $1.74, or 3.2%, to $55.69 a barrel, a day after tumbling nearly 8%, the biggest loss in more than four years.

For the week, Brent was on track to lose about 2%, while WTI headed for a 0.9% loss.

Before the slide, crude futures had seen a fragile rally supported by steady drawdowns in US inventories but pressured by a shaky global demand outlook.

"The market is still digesting the impact of the tariffs on oil markets, but given China has been taking very little US crude year-to-date, we see little scope for the tariffs to directly impact market fundamentals," RoboResearch Commodities Strategis Ryan Fitzmaurice said in a note.

"In fact - oil markets had been under pressure even prior to the tweet despite bullish fundamental inputs this week given the rapidly weakening global economic data and a surging US dollar," Fitzmaurice said.

Trump said he would impose a 10% tariff on $300 billion of Chinese imports and could raise tariffs further if China's President Xi Jinping failed to move more quickly toward a trade deal.

The announcement extends US tariffs to nearly all imported Chinese products. China said it would not accept "intimidation or blackmail" and pledged countermeasures.

China, once the top buyer of US crude, had slashed its purchases last year as the trade war dragged on.

However, US crude oil exports surged 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd as South Korea bought record volumes and China resumed purchases, data from the US Census Bureau showed.

The US economy expanded by 2.1% in the second quarter, government data showed on July 26, beating economists' expectations but lower than first-quarter growth.

Still, there was evidence that the trade dispute was taking a toll.

China this week reported slowing manufacturing activity in July. US data showed manufacturing activity also slipped last month to the lowest in nearly three years, while construction spending fell in June as investment in private projects tumbled to the lowest level in 1-1/2 years.  The market also watched the weekly US oil rig count, an indicator of future production.

US energy firms this week reduced the number of oil rigs operating for a fifth week in a row as most independent producers cut spending even though majors were still pushing ahead with investments in new drilling.